Apple does very well in the U.S. It is not as strong elsewhere in the world. Verizon's iPhone activations were 13% of overall sales last quarter.

If you want something that's positive, it's this: The iPhone remains strong in the U.S. People don't care about the size of the screen, they want iOS.

If Apple were to really make a low cost iPhone, it would probably sell like crazy. That, though, has its own implications. The low cost iPhone would eat into the high end iPhone's sales. Apple has never been scared to cannibalize products in the past, so this time shouldn't be different.